Five Technology Trends To Watch

Description: Cutting-edge technology defines the dynamic $285 billion U.S. consumer technology industry. The industry is in constant flux as new technologies, products and services build on top of the generation before them. And groundbreaking technologies like autonomous vehicles, robotics, 3D printing and unmanned aerial vehicles (drones) are redefining the world. Because the marketplace is always changing, each year the Consumer Technology Association’s (CTA)™ Five Technology Trends to Watch publication selects five top trends to explore how these promising areas could impact our future. For the 2016 edition, we focus on contextual awareness, the future of retail, the connected smart home, how tech is transforming Hollywood, and smart cities that will enrich lives and engage residents.

utting-edge technology defines the dynamic $285 billion U.S. consumer technology industry. The industry is in constant flux as new
technologies, products and services build on top of the generation before them. And groundbreaking technologies like autonomous
vehicles, robotics, 3D printing and unmanned aerial vehicles (drones) are redefining the world.

Because the marketplace is always changing, each year the Consumer Technology Association’s (CTA)™ Five Technology Trends to Watch
publication selects five top trends to explore how these promising areas could impact our future. For the 2016 edition, we focus on
contextual awareness, the future of retail, the connected smart home, how tech is transforming Hollywood, and smart cities that will enrich
lives and engage residents.
Our forward section reveals how some technologies we discussed in past issues are faring today like drones and virtual reality. For example,
CTA projects that the smart eyewear market, overwhelmingly composed of virtual reality (VR) and augmented reality (AR) devices, will
total more than $500 million by the end of 2016.
To learn more about the vibrant innovations enhancing our lives, I invite you to come to CES 2016 on January 6-9, the world’s innovation
showcase, to get a glimpse of a glorious future. New products and technologies are solving real problems and improving the world for global
citizens.
I love the future I see at CES! Drones will deliver medicine to remote places or search for missing people. Cars will avoid accidents.
Wearables already tell us about our health, sleep and exercise and will help the elderly stay at home longer. Sensors are telling farmers how
much to fertilize or water. 3D printers in our homes soon will make almost anything we can imagine.
To see innovation in action, visit the CES 2016 Innovations Awards that honor outstanding achievement in product and engineering design,
the CES Marketplaces that mirror new technology growth areas and Eureka Park where entrepreneurs and startups debut their ideas to the
world.
For more information, visit CESweb.org. See you in Las Vegas.

Gary Shapiro
President and CEO

3

DRONES AT A CROSSROADS
By Bill Belt

W

hen constructing modern airports, designers must be
aware of a host of external factors. Among many other
considerations, prevailing winds and the availability
of buildable land helps determine whether runways are aligned
in parallel or whether runways are intersecting. Often, parallel
runways work best for getting the maximum number of aircraft
landed for a given period of time (all else being equal). In contrast,
intersecting runways are more common at older airports, and at
smaller airports.
Intersecting runways lead to converging flight paths, producing
a virtual “intersection in the sky.” The risk of air travel in these
intersections is slightly increased. The development of low-cost,
high-quality consumer drones has produced a new category of
products and potential services unthinkable even a few short years
ago. But like intersecting runways at an airport, the technology
and the underlying policies governing its use are at a dangerous
crossroads. Safety, security, and privacy concerns are all converging in a way that will shape the future of this technology for many
years to come.
In May, CTA predicted that the U.S. will reach one million unmanned aircraft flights per day within the next 20 years, given the
right regulatory environment.
More recently, a Federal Aviation Administration (FAA) spokesman predicted that one million drones could be sold during the
2015 holiday season. Good news, indeed, for manufacturers and
retailers, but likely raising additional concerns and pressures for
those tasked with protecting airspace and the security and privacy
of critical infrastructure and individuals. This year has seen a rash
of news stories raising concerns – from drones flying too close to
airports, drone flights hampering firefighting in national forests,
and even a few personal injuries. The pressure to contain risks is
increasing just as the public is becoming more fascinated by the
technology and its potential.
So what is the “right” regulatory environment that can balance
safety, security and privacy between existing concerns and the future benefits to the drone marketplace? The FAA is developing new
rules to govern recreational drone use. For example, the FAA must
review airspace rules and procedures to ensure they are up-to-date
and account for drone use. Limits on flying height and strict rules
for flying near airports are critical to protecting other flight operations. Other infrastructure must also be protected such as power
stations, water treatment facilities, correctional facilities, heavily

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Consumer Technology Association (CTA)™

traveled roadways, government facilities and stadiums. Updated
regulations are needed.
Privacy concerns also weigh heavily in discussions related to the
future of drones. Individuals have an expectation of privacy in
many aspects of their lives, and rules must be crafted to ensure
drones to not interfere with our desire for privacy. Sensible regulations can help address many privacy concerns.
Security technologies can similarly impact safety and privacy
concerns. For example, settings that limit maximum altitude can
be incorporated into drones. Geo-fencing can prevent drones from
flying into sensitive airspace. “Sense and avoid” technologies can
minimize the chances of mid-air collisions.
The “right” regulatory environment will combine progressive regulations with technology solutions without sacrificing the benefits
of this new technology. This is a billion dollar technology industry
literally just waiting to take off. Drones will produce a dynamic
market with tremendous growth potential, especially once final
FAA rules are established. Continued industry and FAA cooperation to achieve low-risk drone use will be achieved by combining
technology solutions with the right regulatory structure.
In contrast, over-regulation will have a dramatically negative effect
on the potential of the drone marketplace. Worst of all, a patchwork of local laws is already developing, threatening to further
confuse the regulatory landscape. Like intersecting runways at an
airport, the convergence of safety, security and privacy concerns
will have a huge impact on the future of drones. n

Drones at CES 2016
• TA’s Drone Policy and Innovation conference track at CES
C
explores the rules needed regarding the safe operation of
unmanned aircraft in the national airspace, and new systems
for managing drones must account for security and privacy.
Hear from experts and innovators about how these challenges are being met as drones take flight globally.

Find out more at CESweb.org

CE.org/i3

WHAT’S ON THE HORIZON FOR VIRTUAL REALITY?
By Jack Cutts

W

hen most people think of the future of virtual reality
(VR), their minds immediately jump to video gaming as the future of the technology. Indeed, much of
the current hype and investment surrounding the world of VR
deals with gaming as the first product likely to make it to market.
However there are a number of alternative uses for virtual reality
– and its sister technology augmented reality (AR) – that portend
a bright future as “the next big thing” in consumer technology,
enterprise IT and computing in general. In fact, CTA projects that
the smart eyewear market (overwhelmingly composed of VR and
AR devices) will be more than $500 million by the end of 2016.
Among the market leaders in the augmented reality space is
Microsoft with its HoloLens product. First introduced in early
2015, the HoloLens’ defining feature is that, rather than subsuming the user’s entire field of vision a la virtual reality, the device
allows the wearer to see through the lenses while overlaying other
content onto the physical world. Imagine an editorial team at a
magazine, for example, editing copy virtually, together with pages
and photos overlaid on the walls of a conference room. Beyond a
simple overlay, however, objects viewed through HoloLens can be
made interactive. So a medical student looking at a 3D model of a
human kidney can walk around it or open the kidney to see it from
the inside out.
Other players in the augmented reality space include Google with
its Glass product, first introduced in 2013. Glass is a more traditional take on augmented reality, focused specifically on overlaying information onto the physical world. Developers for the Glass
platform have dreamed up hundreds of unique uses for the device
including instant facial recognition, life logging and virtual tours
for prospective home buyers to enter a home without actually being there.
While virtual reality-based gaming is the most popular near-term
use for the immersive technology, there are other potential blockbuster markets out there. Purveyors of adult entertainment are

assuredly preparing digital content to make use of the full sensory
experience that VR offers. Early players in the VR space, namely
Oculus and Samsung, also offer fully immersive movie theater experiences. Current owners of Samsung’s Gear VR, for example, can
load up some movies on their device and find themselves sitting in
a 360-degree virtual movie theater with their chosen content playing on the screen in front of them. Early demos have also featured
360-degree concert experiences.
In order to enable the best VR entertainment experience possible,
a small industry of 360-degree cameras (like those seen at the 2015
CES from 360fly, Ricoh and Blackloud) has popped up to fill the
future demand for content that can be viewed in all its glory. While
VR gaming experiences are rendered in software, movies and other
video content viewed in 360 degrees must be filmed in 360 degrees,
necessitating complicated camera rigs and software to help stitch
reality back together in digital form.
When it comes to virtual and augmented reality, the consumer
technology industry is doing what it does best: pushing the
envelope of what we think is possible. The hundreds of uses for
this promising technology (and those that haven’t been dreamed
up yet) ensure that everyone will get to experience the technology
first-hand very soon. n

Virtual Reality at CES 2016
• ee where gaming, virtual reality and augmented reality conS
nect in the Gaming & Virtual Reality Marketplace at CES Tech
East. Whether it’s the launch of the next wave of immersive
multimedia for virtual reality systems and environments
or gaming hardware, software and accessories designed
for mobile, PC’s or consoles, these exhibitors will energize,
empower and excite.
Find out more at CESweb.org

5

IT’S ALL ABOUT CONTEXT
By Rick Kowalski

O

ur smart devices are getting smarter.

As sensors and chips are added to more devices, they
are forming a digital representation of the world around us.
Each connected sensor can collect and communicate data
enabling other devices to act on that data to predict patterns in
our lives.
The apps on our phones, once a fragmented collection of
independent programs, are becoming more accessible from
our device home page. Mobile phones can quickly connect to
information contained deep within our apps easily launching
programs with quick vocal commands.
There have also been recent advances in how information is
connected across the Internet. Experts in machine learning and
artificial intelligence are building vast databases of structured
knowledge about the world that can be tapped into by our
devices in an instant.
Developments in natural language processing – a field which
helps computers better interpret the ambiguities in human
expressions – are driving more robust voice recognition on
devices and are helping convert search inquiries into meaningful answers.
Collectively, these trends are making it easier to interact with
our devices more fluidly. Smart devices are getting more intelligent because they are gaining a better ‘understanding’ of the
context in which they operate. With this increased intelligence,
these smarter devices can proactively deliver relevant information quicker than before, and make it simpler for us to program
them to suit our needs.
This intelligence boost comes with good timing. A number of
new devices on the market require us to interact with them
in novel ways. Smart watches, with their smaller screens, are
pushing us towards vocal interaction rather than touch control
and typing. Connectivity in cars also demands a better vocal interface for the sake of safety. There are even screen-less devices
now in which all interaction is vocal.

University, created the definition of context-aware computing that most computer scientists use today. According to Dey,
context is “any information that can be used to characterize the
situation of an entity. An entity is a person, place or object that
is considered relevant to the interaction between a user and an
application, including the user and applications themselves.”
Dey further says that “a system is context-aware if it uses
context to provide relevant information and/or services to the
user, where relevancy depends on the user’s task.” These broad
definitions encompass the capabilities of technologies available
today, namely: embedded sensors and the Internet itself.
The concept of context-aware computing has been around for
a couple of decades. Screensavers, autocorrect and motiondetection lights, as simple as they are, can be considered early
examples. Increasingly helpful implementations began to
emerge when smartphones hit the market; location-based
applications were probably the most impressive demonstration.
Using GPS chips and compass sensors, smartphone owners
soon discovered how easy it is to navigate without a paper map.
It’s hard to imagine living without navigation systems now.
Waze, a smart navigation app purchased by Google in 2013,
adds several new dimensions to its context-awareness. It uses
traffic and location data, along with user-submitted tips on
driving conditions, to optimize driving routes and alert drivers.
It also learns new routes based on observations of drivers in the
area. By incorporating a variety of contextual cues, Waze can
map a route that might be able to outperform the most experienced taxi driver in your area.
Many mobile device keyboards now come with context-aware
solutions. Pre-QWERTY text messaging required mastery of
the alphabet via a nine-digit keypad. T9 texting introduced
predictive elements that would recommend full words to select
from as you typed, basing its recommendations on a database
of the most common words and letter combinations. Today,
QWERTY keyboards can learn vocabulary from your common
expressions and will actively incorporate multi-word expressions in its database.
Anticipatory context-awareness is beginning to emerge now. In
the case of typing on smartphones, software is predicting what
you will want to do in the next second or two. Newer devices
will predict what you would like to do in the next several days.
CE.org/i3

Smart thermostats, such as Nest, gather information about
a person’s presence in the home during the day using motion sensors. Using the time of day and a few extra inputs by
the user (desired temperature and times to stay off), the Nest
builds a contextual model of when heating and cooling may be
needed. The thermostat learns the typical patterns of presence
in the home and times the optimal temperature based on a
person’s arrival and departure.
The predictive power of context-aware computing is one of
the features that make it useful. The idea is that devices can
accurately act on our behalf in a way that saves time and effort.
Software developers are beginning to build predictive features
into personal digital assistants on our mobile devices.
Many of the examples mentioned above are sensor-driven actions. However, there are more examples on the horizon which
include sensor data with the information on our devices as well
as on the Internet. Personal assistants such as Siri, Google Now
and Cortana are making natural language processing, voice
interaction and information delivery relevant to context-aware
computing in big ways.

Top Desired Tasks For Virtual
Personal Assistants
Any (Net)

Reporting the news or weather

Mobile operating systems are paying attention to this trend
and there are a few reasons why they should. First, if they can
improve the search experience for users, they can increase
customer satisfaction and loyalty for their platform. Second,
they also stand to win business from marketers and retailers if
they can more efficiently deliver customers to their sites and
content. Third, they are the first interface that a consumer sees
before diving into the Internet, creating an opportunity to sway
consumers towards their respective ecosystems of content and
software offerings.
The race for better search interfaces is on, and developers see
personal assistants as the main focus. Many consumers are
already familiar with using the personal assistant on their
phones, with four out of 10 cellphone users reporting that they
have used it at some time and 13 percent saying that they use
it daily. These rates will likely increase as personal assistants
improve at delivering information and completing tasks.
What do consumers want out of a personal assistant? Roughly
four in 10 cellphone users (39 percent) want personal assistants
to report the news and weather, and a similar number want
them to perform calling and texting functions by voice command. Twenty-eight percent of respondents want a personal

39

Performing calling or texting
functions by voice command

38

Providing dining and entertainment
recommendations based on location

28
22

Scheduling and time management
Answering questions about music,
movies or TV shows

21

Providing shopping recommendations
and deals pertaining to the
recommended retailers

17

Summarizing trends and
conversations on your social
media accounts

5

21

None of these

Enter the Assistants
People are increasingly looking at their tablets and smartphones for answers. According to comScore, more than 18 billion searches were performed on mobile devices in the fourth
quarter of 2014 in the U.S., a 20 percent increase from the prior
year. In May 2015, Google announced that most searches in the
U.S. take place on mobile devices.

78%

Don’t know/Refused

2

Source: CTA Market Research

assistant to provide dining and entertainment recommendations, while 22 percent would like it to handle scheduling and
time management tasks.
In the summer of 2015, Apple, Google and Microsoft made
major announcements about their respective personal assistant
programs for their operating systems. They address some of the
top desired tasks in the CTA survey, but also add a few more
items to their skillsets. Many of the new features promise seamless integration of content contained within the apps on your
phone. The new features also demonstrate better understanding of natural language and voice commands.

Siri
In June 2015, Apple announced that its personal assistant, Siri,
was being upgraded with iOS Proactive Assistant software to
make it smarter. Siri will know when you get in your car or
when you go to the gym, and it will trigger certain functions or
notifications without you having to touch the phone. You can
program Proactive Assistant to play certain playlists or podcasts based on location. Siri is improving its natural language
processing as well. If you tell it to show you photos of Vegas last
winter, it will know which photos were taken near Vegas and
when, and it will display them.
Siri will also be able to grab information buried within your
apps. Ask it for a recipe, and it will pull from your cooking app.
When asked a question, Siri will look for a local resource (an
app) for the answer.
7

Cortana
Microsoft’s personal assistant, Cortana, hit mobile devices
in 2014. The software company has big plans in store for its
personal assistant in the rollout of Windows 10. Cortana will be
featured on every new device running Windows.

of 92 percent and 95 percent, respectively, in their voice-to-text
transcription. Similar to autocorrecting features in texting apps,
these transcribers are capable of correcting their interpretation
of your spoken words in context of your other words as you are
speaking. This is a smart feature, but closing the last 10 percent
gap in accuracy will be an important goal for developers.

Cortana offers similar features and functionality as Siri, but in
an effort to increase personalization, Microsoft has included
a notebook in which you can add your favorite places, food,
people and news items. Cortana can draw upon this notebook
to better cater to your activities and lifestyle. Further, Cortana
will learn more about your preferences as you interact with it.
For instance, if Cortana notices that you search for a news topic
or a band often, it will ask you if you want alerts on that topic.

One limitation of voice transcription is that it currently functions at the phrase- or single-sentence level of analysis. This
doesn’t offer a great deal of context with which to conduct an
accurate search. Software engineers have addressed this problem by allowing the assistant to ask follow-up questions, such
as “Did you mean…?’’ By adding two-way communication to
the interface when ambiguity is detected, personal assistants
can get more contextual hints when necessary.

Google Now on Tap

While vocal search is geared towards shorter inquiries, analysis
of larger bodies of text is becoming possible. Each of the new
versions of mobile personal assistants can access the text on the
mobile screen and use that as a hint to guess your next action
on the phone. This can include analysis of text in an email in
order to identify key topics of interest.

Apple and Microsoft have chosen to give their personal assistants names, which lends to a notion of a personal interaction
with the device. While the Android operating system sports its
own human voice, it does not have a human name. But there
is plenty of intelligence on display in the upcoming version of
Android, named “Marshmallow.”
Google Now was introduced in 2012 as an Android feature with
predictive and contextual capabilities. The latest upgrade to this
software is called Google Now on Tap, named after the simple
tap of the home button which allows you to find information
and apps related to whatever you are currently doing on the
phone. For example, if you get an email from somebody about
a new band or movie, you can tap and hold the home button
and Google will determine the primary context of your conversation and pull up relevant information about that band or
movie, either drawing from other apps on your phone or from
the Internet.
When viewing photos, you can tap and hold and it will tell you
where that photo was taken. You can ask it to show you more
pictures of that location by simply saying “show me more pictures of this place,” and it will show you top search results for
that location without you having to explicitly say the name of
the place. It understands the context of what you are doing on
your phone at the moment and works that into its search and
results algorithms.
These are early glimpses of a new wave of context-aware applications on our devices. They show promise in quickly retrieving the information we seek with little effort on our part. But
they also show a trend in proactive assistance from our devices.
There are several major developments in computing that are
contributing to these capabilities. They aren’t without their
challenges. Developers will have to work out a few kinks.

Natural Language Processing
Voice processing and natural language processing will be
crucial technologies for ensuring positive and meaningful
interactions with our devices. Voice-to-text was a major first
step in this area. Google and Apple now claim accuracy levels
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Consumer Technology Association (CTA)™

The ability to derive meaning from larger bodies of text has
other implications. Given more than a single phrase, a computer
can begin to recognize tone, sentiment, communication style
and intent. Crystal Project Inc. is taking advantage of real-time
text analysis to help people write better emails. Crystal assigns
personal communication styles to each person in your network
and will recommend revisions to your emails to better complement the recipient’s style. This is incredibly helpful in busy
work environments where emails are easily overlooked.
It is feasible to share a great deal of verbal and written material
with our devices in order to enrich context-awareness. But how
much are we comfortable with sharing? Apple says all data mining will happen on the phone only, and won’t be shared outside
of the device. For this type of computing to be valuable, it will
need to have some information about you and your activities.
Users will have to determine the balance between the information they give versus the value they will receive in return.

Structured Knowledge Bases
Devices can derive context at the local level, but they are also
able to take the wealth of information available on the Internet
as input. But the Internet is a messy and chaotic place; inaccurate information abounds. When you search for something
online, it’s not in a personal assistant’s best interest to deliver
a list of Web pages in which to get lost. It needs to give you an
answer – and hopefully the right one. Devices will make use
of custom-built knowledge bases in order to best answer your
questions.
Google’s Knowledge Graph hopes to provide all the answers.
Knowledge Graph goes beyond the function of a search engine.
Instead of merely determining website relevancy by the concurrency of search terms on a page, it uses machine learning to
apply structure to the information held within Web pages and
CE.org/i3

correlates entities and facts across those pages. If you have run a
Google search and seen a box at the top or right of your results
that answers your question before you have to click on a results
link, then you have seen the power of this database.
There are a couple of competitors to Knowledge Graph. Diffbot
claims to offer a larger knowledge base than Google, and is
currently used by Bing and Duck Duck Go for certain types of
searches. Grafiq (formerly known as FindTheBest) is another
company offering a large database of structured information.
The billions of facts contained within these repositories will
greatly enhance context-awareness in our personal devices.
Engineers just need to figure out the best way to incorporate
real-time information about our activities and location with
these databases.

Choose Your Own Context
Much of the push behind context-aware computing is to be
able to predict and stay one step ahead of the user, anticipating needs at any given time. Mobile platforms can gather a
good amount of data on how users search for information, so
in some cases they can easily create proactive elements to their
software. But form factors and use-case scenarios are everchanging, especially with recent developments in smart watches
and in-vehicle integration of mobile devices. Software developers will need to observe how people are using their devices in
these situations.
Developers must also be aware that users may not find contextaware actions useful, and in some cases they may even find
them confusing or unwanted. Albrecht Schmidt, professor of
human-computer interaction at the University of Stuttgart,
recommends adding elements of transparency when implementing context-aware triggers. Take the example where Siri
chooses a fast-paced playlist for you when you visit the gym. A
transparent action would let the user know why it chose that
playlist, and may allow you to change the default action.
To some extent, developers will have to make users aware of the
contexts that can trigger actions on their devices. Web startup
IFTTT has created a growing community of users who realize how useful context-triggered actions can be. IFTTT allows
users to set up ‘recipes’ that trigger an action on one Web-based
service when something happens on another service. Collectively, users have created millions of productivity tasks through
the site. Mobile developers may be able to tap into this type of
enthusiasm and help facilitate context-triggered actions, putting the power in the hands of the user.

Expect these companies to make more deals and acquire talent in the artificial intelligence (AI) arena. Google’s purchase
of AI startup DeepMind in 2014 is just one indication of this
trend. Apple is usually secretive about its acquisitions, but they
confirmed reports of a late 2013 purchase of automatic speech
recognition company Novauris Technologies. Microsoft’s
deep-learning project, Adam, is an in-house effort to improve
computer tasks such as image recognition while reducing the
required processing power. These are just a few examples of
how companies are analyzing and making sense of user-generated content and data.
Facebook could very well look to make a move in this space as
well. The company is now test running a messaging assistant
called ‘M’ which can book reservations and purchase items on
the user’s behalf. The small trial currently relies on people to
carry out the final transaction, but it uses AI to find the best
information and services. Time will tell whether the service is
scalable. With nearly a billion daily active users, it is likely that
the social media giant will try to tap into the potential of helping handle transactions on the Web.

The Future in Context
Context-aware applications will proliferate on computing
devices such as PCs, mobile phones and tablets. According to
CTA Market Research, worldwide smartphone shipments will
rise from an astounding 1.3 billion units in 2015 to 1.7 billion
units in 2019. PCs of all shapes and sizes will maintain a steady
stream of shipments, rising from 430 million units in 2015 to
437 million in 2019 worldwide.

Smart Watch Shipments, Worldwide
Unit Sales to Dealers (thousands)

25,954
24,032
19,632
15,101
11,186
3,925
2014

2015

2016

2017

2018

2019

Source: CTA Market Research

Key Players
Overseeing the leading operating systems, Microsoft, Apple and
Google are leading the charge in context-aware computing. The
magnitude of each of these ecosystems allows for each company
to monitor and learn from a huge amount of data generated by
those using their platforms. But to make sense of that data, they
will likely have to tap the market for specific skills in computer
science.

The context-aware trend will likely branch out to other devices,
as TVs, smart watches and cars include personal assistant
interfaces. On the wearable front, smart watches are a great
opportunity for context-aware keyboards and voice interaction.
Worldwide shipments of smart watches are expected to grow
from 11 million units shipped in 2015 to nearly 26 million
units in 2019.
9

Solutions that help integrate smartphones into the vehicle
may also impact the success of context-aware software. The
hands-free nature of voice interaction lends itself to a safer
driving experience. While some car manufacturers are building
proprietary personal assistant software into their newer models,
others are also including screen-mirroring technology to pull
smartphone interactions into the vehicle’s main screen and
audio system.

is in programming itself, consumers will likely be given more
options to set up triggered actions to suit their needs.
You may just want to introduce yourself to your personal assistant now, because one thing is for sure: if you haven’t met
yet, you will soon. They are coming to your device before long,
ready to assist and show off their new abilities. n

Sensors at CES 2016
• he Lifestyle Technology conference track allows attendees
T
to dive deeper into the evolution of sensors and wearables.
• he Internet of MEMS and Sensors conference track, preT
sented by MEMS Industry Group, features sessions related
to the growth and future trends for sensor technology. Find
out how MEMS/sensors technology is advancing user functionality in new and existing classes of applications fueling
consumer demand.

Find out more at CESweb.org
2.6
2015

2020

Source: IHS

These solutions are just beginning to take hold. IHS says that
2.6 million vehicles will have screen projection capabilities in
2015, which includes Android Auto, Apple CarPlay and MirrorLink. They forecast this to rise to 85 million vehicles in 2020.

Consumer Outlook
Our devices are now connected to a vast network of human
knowledge, real-time data, and artificial intelligence capabilities. Developers are in the midst of integrating these resources
while exploring new applications and use-case scenarios. The
personal digital assistant appears to be the face of these new
technologies, here to improve our search experience by incorporating more information about our world and our day-today activities.
In the short term, consumers can expect fewer clicks, taps
and swipes on the device screen (if the device even has one).
The personal assistants now emerging will try to stay one step
ahead of the user, making suggestions and recommendations
as to where to go next to find an answer. Often this next step
will point directly to information within an app on the device
rather than supplying a list of links in a search engine. Users
will see fewer Web pages altogether, as the device will attempt
to deliver an answer immediately.
Consumers will also likely see more options when it comes to
customizing and personalizing their device’s actions based on
specific situations. If the device notices that you often visit a
particular location, it may ask you if you would like it to perform an action the next time you go there. It may even recommend specific actions. Regardless of how proactive the device
10

Consumer Technology Association (CTA)™

CE.org/i3

THE NEW FACE OF RETAIL
By Justin Siraj

T

echnology is affecting every part of our life in one way
or another. It has changed the way we interact with one
another, perform everyday tasks, track our activity and
organize our daily lives.
Over the past 20 years technology has shifted the way consumers
interact with retailers. Many would think that the future of retail
is online and that soon brick-and-mortar stores will be phased
out. That is not the case. According to the International Council
of Shopping Centers, 78 percent of consumers still prefer to shop
in-store, spending about $1,500 more per month in a brick-andmortar location than online.
However, online retail – or e-commerce – still continues to grow
and play a huge role in the retail sector. According to estimates by
the U.S. Commerce Department, online sales for e-retailers totaled
more than $300 billion in 2015, up 15.4 percent from 2013. Not to
mention the growing popularity of “Cyber Monday” and Amazon’s
newly introduced Prime Day.

The Connected Store
Most of us have heard about the Internet of Things (IoT) and how
it involves everyday physical objects that connect to the Internet
and talk to one other. A lot of what we hear about IoT has to do
with smart homes, wearables and automobiles. But think about
leaving your personal boundaries and having your devices talk to
the world around you. For example, what if you passed a grocery
store and your phone alerts you to pick up eggs because you ran
out this morning. Or you pass your favorite clothing store and
receive a text that the shirt you have on your wish list was just put
on sale. This is starting to happen now as retailers are changing the
way that they interact with consumers.

What type of store would beacons
be most useful in?
68%

65
55
48

But what the future of retail has in store is not more separation
between the two forms of retail we have grown accustomed to, it is
the convergence of e-commerce and brick-and-mortar stores. The
rise of the Internet of Things, ambitious entrepreneurs and general
growth of the consumer technology industry has led to – and will
continue – the advancement of retail for both consumers and
retailers.
Developments in beacons and trackers are taking shopping to a
whole new level for consumers and are providing retailers with
vital information to accelerate productivity. Mobile payments are
starting to become normal with the introduction of new services
like Apple Pay and the evolution of Near Field Communication
(NFC) payments and Wireless Application Protocol.
Customer service is being taken to the next level with artificial
intelligence, personal assistants and virtual reality (VR). Most
importantly, what products are being sold at our favorite stores
is changing. New product areas are calling for shelf space and
soon products like drones and 3D printing will be as common as
televisions or computers in retail stores. The world we are living in
is changing and it is changing fast. We are no longer just shopping
for the latest technology. We are shopping in and with the greatest
innovations. We live and shop in an advanced world now, but it
is nothing compared to the totally immersive experience we are
heading towards.

13

Mass merchant Electronics
stores (Target,
stores
Walmart

Home
improvement
stores

Office supply
stores

Other

13

Don’t know

Source: CTA Market Research

Beacons, defined by Bluetooth®, are small objects that transmit
location information to smartphones and make use of a mobile
wallet, mobile couponing and location-based services. This upand-coming technology is transforming the retail space into a
connected experience. According to Bluetooth, the retail space is
the first to envision a future for beacons, using them for everything
from in-store analytics to proximity marketing, indoor navigation
and contactless payments.
“Parks Associates expects Bluetooth to play a much larger role in
the mobile wallet ecosystem. Not only does Bluetooth Smart have
support from major players like PayPal and Apple, but it also enables three crucial mobile wallet functions: payment from mobile
phone to point-of-sale terminal, passive transmission of marketing

11

messages, and the ability to detect a consumer’s location in-store,”
says Jennifer Kent, senior analyst, Parks Associates.
Estimote Beacons and Onyx Beacons are prominent developers in
the beacon space and provide both the shopper and retailer with
benefits. It allows the retailer to build mobile interactions with the
customer by giving a recommended route around the store catered
to the shoppers needs, recommend products that a shopper might
like or show specifications of a product that a customer is interacting with on a display nearby.
Estimote also allows retailers to analyze what areas of the store customers are drawn to and what products they are interacting with
the most by placing beacons on the actual product. Onyx offers a
content management system that allows micro location-enabled
apps to be built around beacons. On a larger scale, mall operators
can place beacons at mall entrances to notify visitors about the latest sales, movies or mall events.
In a recent survey conducted by CTA, 68 percent of respondents
said that beacon technology would be most useful in mass merchant stores such as Target or Walmart. Close behind, 65 percent
and 55 percent of respondents thought beacon technology would
be most beneficial in electronics stores (Best Buy or hhgregg) or
home improvement stores (Home Depot or Lowes), respectively.
In August, Target announced it will be testing beacon technology
in 50 locations nationwide. The goal is to serve up timely deals
and recommendations on nearby products. “We’re excited to start
using beacon technology to offer real-time, relevant content and
services that can help make shopping at Target easier and more
fun,” said Jason Goldberger, president of Target.com and Mobile.
“This is another way Target is bridging mobile and stores, and
using digital to enhance the in-store shopping experience. We look
forward to seeing how our guests respond to what we’ve built.”

According to CTA’s survey, 53 percent of respondents said they
have used a mobile payment service in the past. Further, 70 percent
of respondents between the ages of 18-34 have used a form of
mobile payment, while only 46 percent of respondents over the age
of 35 have. This generational gap shows the trend of how the payment paradigm is shifting to more of a contactless setting.
However, when respondents were asked if they were comfortable
with replacing all forms of payment with mobile payment, only 29
percent said yes, while 66 percent said no. As far as the generational
gap goes, 35 percent of respondents between the ages of 18-34
were comfortable with mobile payment taking over all forms of
payment, while only 27 percent of respondents 35 and over were.
This response shows that mobile payment is a convenience, not a
solution. But retailers must be willing to offer this convenience to
stay competitive, relevant and consumer friendly.
The Digital Mobile Payments Influence Study conducted by Appinions confirmed that there was a significant increase in the volume
of influential conversations in relation to mobile payments in
2014 following Apple CEO Tim Cook’s announcement of interest
in mobile payment. Cook has since said that by the end of 2015
roughly 1.5 million locations in the U.S. will be able to accept
Apple Pay.
The study also found that the top companies that are influencing
the mobile payments conversation are OpenTable, Starbucks, Amazon, eBay, Chipotle and Whole Foods. Some of the top payment
services that are influencing the mobile payments discussion are
PayPal, LevelUp, Braintree, Venmo, Square and Clinkle.

You are comfortable with the idea
of mobile payment...
28

CVS recently unveiled its Digital Innovation Lab in Boston, which
provides smart device-driven apps and devices to improve health
care. “At CVS Health, everything we do is to help people on their
path to better health, and digital technologies are an amazingly effective way to achieve this,” said Brian Tilzer, senior vice president
and chief digital officer for CVS Health.
According to Hilary Milnes of Digiday.com, CVS’ beacon technology can remind users if a prescription is ready or in need of a
refill. Tilzer added, “Digital technologies are ubiquitous and highly
configurable – a powerful combination, because it allows us to
empower our customers anytime and anywhere.”

28

27%

10
5

Strongly agree

Somewhat
agree

Neutral

Somewhat
disagree

Strongly
disagree

Source: CTA Market Research

A Contactless World
As a society we have moved from carrying cash, to checks, to cards
and now to…nothing. We are trending towards a future where the
only possession we need to do almost anything is our smartphone.
The ubiquity of mobile devices is changing the way retailers do
business with customers, because more options need to be available and more technology is needed to accommodate different
forms of payment. With the introduction of services like Apple
Pay, Google Wallet, PayPal, Venmo, Square and Stripe, the options
are endless for sending or receiving payment.

12

Consumer Technology Association (CTA)™

Starbucks offers a great example of how mobile payment is integrating its way into retail stores. The popular coffee company offers a number of ways to pay using a mobile device which includes
a Starbucks app and Square Wallet. The app allows customers to
scan a barcode on the apps screen to make a payment, offers digital
tipping through push notifications and features a loyalty program
for customers who use the app. Square Wallet can also be used to
link to a debit or credit card. Customers just tap “pay here” and a
QR code appears that customers can scan at Starbucks.
CE.org/i3

Grocery giant Whole Foods followed in Starbucks’ footsteps and
partnered with Square to let customers pay through iPads and
smartphones. “Whole Foods Market and Square share a focus on
supporting local sellers and creating amazing shopping experiences,” said Jack Dorsey, co-founder and CEO of Square. “With
Square, Whole Foods Market will enable commerce in more parts
of their stores with easy, accessible tools that showcase the best of
what’s achievable in the service of retailers and customers.” According to a press release, several Whole Foods Markets will serve
as test locations in order to enhance the experience and meet the
needs of shoppers.

A main concern of mobile payment is security and having personal
information shared in the “cloud.” The advantage that contactless,
or NFC, transactions have is that a unique code is produced and
sent to the merchant. This way the credit card number is never
given to the merchant and the unique code is only good for that
specific transaction. For even more security, a fingerprint, eye scan
or heart rate sensor can provide additional protection.

Robots and Virtual Reality
Mobile payment and beacons are not the only things changing
the shopping experience. The introduction of robotics and VR is
making its way out of homes and into the retail space. These technologies are ushering in a new era of retail customer service that is
more interactive, intuitive and helpful than ever before.
In a recent interview with It is Innovation (i3), Lowe’s Innovation
Labs’ Executive Director Kyle Nel talked about how Lowe’s is redefining the retail experience. “We are living in an exponential world
where things are changing at faster rates because of Moore’s Law in
business and society,” says Nel. “To stay relevant, and hopefully to
grow, you have to become an exponential organization to ride that
curve.”

Somewhat
Agree
28%

Somewhat
Disagree
13%

higher disposable incomes and the opportunity to provide more
personalized experiences through loyalty schemes.

Neutral
4%

Source: CTA Market Research

A study by Juniper Research shows that mobile wallets using contactless tech is predicted to rise to 200 million by the end of 2016.
Deloitte predicts that by the end of 2015, five percent of 600 to 650
million NFC-equipped phones will be used at least once a month
to make contactless payments in a retail outlet. According to
Deloitte, NFC phone payments offer continuity and improvement
to financial institutions’ business models. Deloitte says retailers
should consider four benefits: reducing the need to protect customer data, the higher speed of contactless transactions compared
to other forms of payment, the ability to attract customers with

Lowe’s recently partnered with robotics startup Fellow Robots to
build the OSHbot, a retail robot that is fully autonomous. “They
roll up to you and talk in a fully natural way and say, ‘Hi I’m OSHbot, can I help you?’” says Nel. “You could say, ‘Yes, I’m looking for
hammers’ and the robot can autonomously navigate you to that
spot.” The OSHbot also has a 3D sensing camera so it can recognize products held up to it, speaks English and other languages,
and has obstacle avoidance. Nel believes that with technology the
shopping experience will become more intuitive in the next five
years. “It will also allow people to interact in the store,” says Nel.
“The robot is the best example of something dramatically new and
different that will open up a whole new realm of possibilities where
they just didn’t exist before.”
But robots can work for more than just customers; they can also
be a huge assistance to employees. According to a whitepaper by
Dr. Swagat Kumar, Head of Robotics Research Group, TCS, the
use of robots can extend to supporting faster order fulfillment,
minimizing out-of-stock scenarios, ensuring planogram compliance, and mitigating shrinkage and theft. Kumar says that Amazon
has installed 15,000 robots across 10 warehouses in the U.S. to get
packages out more quickly, but that doesn’t mean that it can only
be used by big box retailers. “A medium-sized retail store may prefer using a simple robot for basic monitoring and stock assessment
on shelves,” the whitepaper states. “On the other hand, a big box
retailer may opt for services that offer special capabilities such as
interacting with customers through speech and vision.”
Along with robotics, VR and AR are also changing the customer
service and retail shopping scene by creating an immersive shopping atmosphere merging the brick-and-mortar experience with
the e-commerce experience. According to data from Juniper

13

Research, 60 million users across smartphones, tablets and smart
glasses used augmented reality apps in 2014 and this number is
expected to more than triple to 200 million unique users by 2018.
In the auto space, companies like Volvo and Jaguar Land Rover
are using VR to give their shoppers an engaging experience. Volvo
introduced its Google Cardboard test drive, which lets people take
a Volvo on a test drive regardless of location. All that is needed is
a smartphone and the app to experience the test drive, which also
works without Google Cardboard. Jaguar Land Rover introduced
its Virtual Experience, an interactive digital vehicle showroom. According to a press release, “using a touchpad screen, the customer
can select model, equipment grade and feature preferences, which
Virtual Experience renders as an ultra-high resolution, real-time
3D image and leveraging a ground breaking five million polygons.”
Lowe’s and Azek are using virtual and augmented reality to make
home improvement projects easier for consumers. Lowes’ Holoroom is a 3D augmented reality virtual room that allows shoppers
to design a room and literally walk into it while working with a
trained sales associate for assistance. According to a case study
done by Marxent, “The experience of designing and stepping into
a 3D Augmented Reality room builds enthusiasm for the purchase,
and the 3D view helps shoppers confirm their product selections.
Custom Holoroom analytics allow Lowe’s to drive future decisions
based on user behavior.”
Similar to the Lowe’s Holoroom, Azek is an augmented reality
home improvement app that lets users visualize and plan a home
improvement project on a tablet. According to Marxent, “AZEK
2.0 expands upon the initial 2D/3D Augmented Reality visualization tools in the AZEK 3D AR home improvement app with added
wood selections, finishes and railings.” Both of these tools allow for
real-world visualization in a digital setting.
Companies like Magic Mirror and MemoryMirror are using augmented reality to show how clothes fit. This virtual dressing allows
shoppers to send a photograph to share with friends for a second
opinion. This technology lets customers try on clothes that are different colors, shapes, sizes and styles, while taking pictures which
are easy to compare and contrast. These “mirrors” can also be used
for more than just digital fitting rooms; they can also be used for
digital signage to engage with customers.
VR is also making it possible for retailers to test out different store
layouts. Kantar Retail Virtual Reality is VR software that shows
retailers different layouts, marketing displays, product packaging
and customer flow within the store. It makes the marketing process
more efficient and lets teams weigh different options or take suggestions from customers for instant feedback through the software.

Before our eyes, the world is transforming into a totally interactive
environment where we can engage with our surroundings. The
metamorphosis of retail can also be best described as a rebirth. As
brick-and-mortar stores and ecommerce have been growing apart
in the past, new technology is merging both aspects of retail to
maximize profit, customer service and demand. We no longer have
to wait for the future, the future is happening right now. n

Retail at CES 2016
• he eCommerce Marketplace, presented by MasterCard, will
T
show innovative solutions that disrupt the traditional shopping experience. Mobile payment apps, shopping platforms,
mobile concierge services and cloud solutions showcase
what’s next.
• oday’s technology is challenging, sophisticated and specific
T
to different markets. Check out the Creating and Selling
Tech conference session and hear from industry insiders as
they reveal the new ways we are creating, using and selling
technology.
• he first Digital Money Forum conference track at CES
T
explores cashless payment systems, virtual currencies and
paper currencies demise.

Find out more at CESweb.org

Shelf Space
One of the hottest and most popular technology products on the
market right now are unmanned systems, or drones. According
to CTA’s 2015 U.S. Consumer Electronics Sales and Forecasts,
total sales for unmanned systems in 2014 were $299 million
and are expected to reach $363 million by the end of 2015.
Best Buy recently announced that it would add more drones to
its inventory and also increase promotion of drones as the industry grows. CTA estimates that more than 400,000 drones will
be sold in 2015 at a price of $149 per unit. Seems like consumers would mostly buy drones online, but they are now finding
their way into brick-and-mortar stores.
According to Frank Bi of Forbes, eBay has sold more than
127,000 drones worth $16.6 million since last March. Unmanned Systems are slated to earn $443 million in 2016,
says CTA.

What Does it all Mean?
The growth, emergence and adaption of retail technology is propelling the retail industry as well as fostering the consumer technology industry. In-store beacons, mobile payment, robots, virtual
reality and drones once sounded like distant, futuristic words.
They are now part of our everyday vocabulary and we have the
pleasant opportunity to use these technologies in our daily lives.

14

Consumer Technology Association (CTA)™

CE.org/i3

HOME IS WHERE THE SMART IS
By Mark Chisholm

T

he world of divided, individually connected devices in
the home has fallen away. It has been replaced by a new
age of the smart home, complete with an array of devices connected not only to the user but to the cloud, as well as
other sensors and devices found throughout the home. This new
interconnected reality is made possible by the spread of broadband
connections in homes and in our pockets, the emergence of the
cloud and the explosive growth of sensors that now surround us in
nearly every aspect of our lives.

locks on the front door. Through an app equipped with security
options, using a thumb print or security code, you unlock the door
before reaching the front steps. Should you have forgotten your
security code or if your phone had run out of batteries you also
could either use a traditional key or access your security system
or intercom, equipped with a camera and an Internet connection.
Another family member can view a video stream of the front porch
on their mobile device, verify your identity and hit a button to
unlock the doors for you, no matter whether they’re home or not.

With all of these factors in place, the stage is set for the truly smart,
connected home. Disparate, connected devices throughout the
home can communicate both with each other and users, through
a smart home controller or hub. Thanks to their ability to access
information obtained from the cloud (through a home network),
or from other smart devices in the home – a form of connectivity
which has become known as the Internet of Things (IoT) – these
new additions to the smart home can enhance the consumer’s
experience by taking control of their own home ecosystem.

As you enter the home, your phone receives a push notification.
Not only has your inconsiderate family member stolen your spot
in the garage, but they’ve left the refrigerator door open. Thanks
to your connected fridge, you’re notified and stop by the kitchen
to close the door. Part of you wonders how long the refrigerator
door has been open – you asked the system to only notify you
when you’re within a reasonable range – and you remind yourself
that you could change that setting at any time. When you run to
the grocery store later, the fridge will send you a reminder of your
grocery list thanks to your smart home.

Open House at the Smart Home
Imagine you are commuting home from work. Thanks to the
GPS sensor on your smartphone – which has made a note of your
standard daily routine – the phone in your pocket begins making
preparations for your arrival at home. First, it may decide to access
your HVAC system through a connected thermostat – which has
opted to turn off your A/C to save power while you’re at the office
– in order to tell it to bring the temperature down to a comfortable
70 degrees. Thanks to the thermostat being connected to the home
network, your smartphone needs only a data connection to the
greater Internet to contact the device – removing the need to be
within a certain range.
Next, as you approach your home a smart garage door opener is
activated, allowing you access without the need to press a button.
Previously, garage door openers operated on unlicensed wireless
spectrum known as “white spaces”, greatly reducing their range. Of
course, your new connected garage door opener still can operate
on such frequencies, but why wait for a click of the button when
your home is aware of your location?
Today, however, the garage door doesn’t open. It has recognized
that another family member has arrived home first and is aware
that the garage is already full. No worries, after parking in the
driveway, you reach for your smartphone and activate your smart

Glancing out the kitchen window into your backyard, you wonder
why your automated sprinklers haven’t watered the lawn today. A
quick check on a wall-mounted panel informs you that your connected sprinkler system was notified of emergency drought relief
in your area, and that lawn watering is currently limited to two
days per week. Override at your own peril! Another quick glance at
the panel informs you – thanks to your Parrot Flower Power smart
flower pots – that your plants’ temperature, fertilizer, sunlight and
moisture needs are still being met.
In the bathroom, a smart water leak sensor keeps an eye on your
plumbing and a connected scale analyzes your weight and body
mass index, and if you allow it, reports it to a physician or personal
trainer. This data is subsequently used to formulate recommended
dietary changes, which are then sent to your refrigerator’s grocery list. In the children’s bedroom, connected vital sign sensors
are found anywhere from a baby’s sock (see Owlet’s Smart Baby
Monitor, launched at the 2015 CES) to a stuffed companion (see
Teddy the Guardian, also launched at CES). These vitality sensors
can convey information on a child’s well-being directly to your
mobile device. Another part of your home is looking out for your
little one’s health as well: connected motion sensors surrounding
your outdoor pool help to put you at ease – no playing by the pool
without adult supervision. Should a child wander into the pool
area, alerts simultaneously will pop up on your smart TV, computer, connected stereo and smartphone.

15

In your bedroom, sleep trackers in the form of wearables or
embedded in the mattress itself can measure and analyze sleep
patterns, communicate with your alarm to wake you at the best
part of your sleep cycle and even tell your mattress to adjust the
firmness in order to help you sleep soundly. Keeping all safe within
the home, of course, is a connected smoke, carbon monoxide and
humidity detector.
This home knows who you are, where you are (whether inside
the home or out), what you want and what you need. This is the
smart home of today, not tomorrow. All of these applications are
already available, and as CTA and Parks Associates explained in
their recent study, Smart Home Ecosystem: IoT and Consumers, they
“represent the beginning, not the end, of a transformation in the
management of systems and devices in the home.”
There is much to come. As the capabilities and applications of connected devices expand, each application has the potential to create
a multitude of others as each device and sensor begins communicating via the IoT. As the study states, “The potential breadth of applications is nearly unlimited with available applications increasing
routinely.”

Establishing the Smart Home
Each of the elements for the smart home of today is here waiting
to be connected. Finding their way into the home is a challenge
rooted in consumer education, ease of use and installation and
industry standardization. CTA predicted in its U.S. Consumer
Electronics Sales and Forecasts, July 2015 that connected total dollar sales to dealers of home technology will reach $7.63 billion in
2016, a modest six percent increase from the estimated total of
$7.19 billion in 2015. The lion’s share of this total – $4.69 billion
– can be attributed to home security solutions, but looking back
over the last five years, a dramatic increase in what CTA refers to as
connected home technologies can be seen.
Connected home technologies accounted for a meager $98 million
in sales to dealers in 2012 (just 1.8 percent of the home technology
total), but are forecast to reach $1.1 billion in 2016 (14.4 percent of
2016’s total). In the recent study, Smart Home Ecosystem: IoT and
Consumers, CTA states that 10 percent of all U.S. households have
at least one smart home device. “Once a household has one smart
device, there is, on average, a 1-in-2 chance that same household
will acquire another device within a year,” the study states. The
likelihood of adoption is also affected by the age of the user. The
recent survey conducted for Five Technology Trends to Watch found
that adoption or interest in connected home devices fell with age,
with the 18 to 24-year-old age group being the most likely to purchase a connected home device.
As more IoT applications arrive, we can expect to see connected
home technologies claim a larger piece of the total, but consumer
familiarity and suitable sales channels remain elusive for the time
being. In CTA’s survey, 38 percent of respondents said that they
would purchase a connected home device from a security firm
such as ADT or Protection One, followed by retail locations at 30
percent.

In the Smart Home study, CTA also found that when respondents
were asked to cite three brands for smart home service providers,
ADT and AT&T had the highest rates of unaided awareness as
smart home service providers. “Among current owners of smart
home devices, methods of buying new products are diverse. There
is a low rate for retail purchase and a relative high rate for acquisition from security or broadband providers,” the study states.

Connected Home Device Purchase Location
From a security firm, such as ADT,
Protection One, etc.

38%

In a retail store

30

Online

13
11

From a custom installer

Don’t know/Refused

8

Source: CTA Market Research

While purchase from a security firm remains the most popular
option, 38 percent remains a small figure, suggesting that consumers may be unfamiliar with where to buy home technologies, or
intimidated by the perceived difficulty of installation. Awareness
of smart home technology itself is low, as CTA notes in its Smart
Home study; “consumers struggle even more when asked to name
product manufacturers, unaided.”
Purchasing a smart home device at retail was the second most
popular response. Lutron’s Co-Chief Executive Officer, Michael
Pessina, had some advice for selling smart home devices at retail
locations, and for creating smart home displays, which he gave
during a recent interview with CTA’s It Is Innovation (i3) magazine.
“We [at Lutron] are very involved in displays, and how our products are presented. Once a person experiences lighting control,
they get it. But, it’s harder to explain that experience on a box, in
an online message, or in a printed advertisement. There are a few
CE.org/i3

things we consider to be essential for a successful retail operation:
The first is how you present the product; the second is what the
product looks like in a presentation; the third is the sales associate’s
level of product knowledge.”
Once consumers understand the technology, it still may take some
time for them to become comfortable with smart home technology. Connecting personal, everyday items to the Internet opens up
privacy concerns (when devices like baby monitors equipped with
video cameras come into play), and even security concerns when
considering technologies such as smart locks. CTA’s survey suggests that consumers are concerned about smart home technology,
though perhaps not as concerned as one might expect.

Protocol Soup
Another challenge for getting connected technology into the
home lies in the vast (and still growing) number of smart home
technologies. The earliest smart home protocols were based on
powerline communication, meaning the data is carried on a physical wire that is also used for A/C electric power transmission. X10,
a standard developed in 1975 by Pico Electronics, is an example of
a powerline protocol. Despite the development of a wireless radiobased version, this standard has become dated, as the data rate of
20 bit/s remains low and installation is difficult. UPB, or Universal
Powerline Bus, is a powerline-based protocol with a higher data
rate of 480 bits/s, but the majority of recent protocols are wireless
in nature.
INSTEON, a smart home technology developed by Smartlabs Inc.,
is one protocol that looks to bridge the gap between wired and
wireless smart home technologies, as it is compatible with X10.
Two of the biggest names in wireless smart home tech are ZigBee
and Z-Wave. ZigBee, a specification first conceived by IEEE in 1998
and standardized in 2003, is a low-power wireless protocol with a
data rate of up to 250 kbit/s and a range of up to 100m. Z-Wave
is a similar but comparatively new protocol – operating on the
908.42 MHz frequency – that has gained a great deal of traction in

Level of Comfort Using Smart Home Products
Connected security system
(with camera)

recent years. The Z-Wave Alliance, a group of 325 companies (as of
2015), has certified more than 1,350 products as compatible with
the standard. Some of the Z-Wave Alliance’s principle members include ADT, Ingersoll rand, FAKRO, LG Uplus and Sigma Designs.
Both ZigBee and Z-Wave take advantage of what is known as a
“mesh” network, allowing one compatible device to relay the wireless signal to another compatible device, extending the range of
the network. Not to be ignored in the wireless home networking
discussion is Bluetooth Low Energy (BLE), marketed as Bluetooth
Smart, which is now being included in more products.
As can be seen by this long – but still incomplete – list of smart
home protocols, there is some work to be done with making all the
pieces of the smart home fit.
Not surprisingly, the most ubiquitous of wireless technologies, WiFi has become a popular option for the smart home. While Wi-Fi
is commonly the “backbone” of the smart home, as the devices will
access the home Wi-Fi network to communicate with the cloud
and devices outside the home, it is also an option for transmission
of data between devices within the home. Wi-Fi, however, because
of its widespread nature, comes with bandwidth and interference
concerns as the home network gets more crowded. Wi-Fi also has a
higher power requirement than other protocols, making it unsuitable for smaller, battery-powered smart home devices. Another
unavoidable downside to Wi-Fi as a smart home protocol is the
reality that broadband connections, and therefore Wi-Fi-based
home networks, are subject to service outages.
Major players are stepping into the ring to unite these disparate
protocols for the benefit of consumers and manufacturers alike,
including CTA’s TechHome Division which represents the channel
for home control, entertainment and networking products, including installers, distributors and manufacturers. CTA developed
the TechHome Rating System, which lays out the technological
infrastructure that needs to be installed in a home in order to fulfill
a homeowners’ digital wish list. R10 standards committee – a committee comprised of CTA and CEDIA members, strives to establish
bulletins and standards for design and installation of residential
systems. Outside of CTA, another group looking to deliver standards as well as open source solutions is the Open Interconnect
Consortium, which includes such big names as Broadcom, Intel
and Samsung Electronics.

“A major barrier to realizing the full promise of the Internet of
[Things] is the absence of a unified community and universal
framework that prioritizes intelligent interoperability across
electronic devices and systems regardless of transport layer, platform, OS or brand,” states the website for AllJoyn. This software
framework was first developed by Qualcomm then passed on

17

to the Linux Foundation. The AllSeen Alliance – comprised of
members including but not limited to Canon, Electrolux, Haier,
LG, Microsoft, Panasonic, Qualcomm and Sony – is focused on the
AllJoyn open source project, which is described as a “transportlayer-agnostic”.
AllJoyn supports transports including BLE, ZigBee and Z-Wave,
not to mention Wi-Fi and Ethernet. At its booth at the 2015 CES,
Qualcomm had a mock smart home, all connected via the AllJoyn
platform. An AllJoyn app on a mobile device brings all areas of the
smart home together in one place, as opposed to the scenario of a
number of smart devices separated by their own dedicated apps.
That’s a lot of big names, but there’s still more to come. Microsoft
has touted AllJoyn support as a major feature of Windows 10, and
Apple and Google have also shown interest in being a part of the
smart home landscape. Apple created the HomeKit database for
developers to make software that can communicate with and control the smart home. In the HomeKit scenario, an AppleTV could
function as the smart home “hub” with Siri serving as the smart
home assistant, responding to smart home requests. HomeKit is
fairly new, however, and at the time of writing only slightly more
than a dozen accessories are available. However, given the popularity of Apple products, expect to see HomeKit become a major
player in the home.
Google clearly has its eyes set on the smart home, something that
could be seen as far back as its 2014 purchase of Nest Labs – maker
of the Nest connected thermostat – for $3.2 billion. In August,
Google announced the Google OnHub Wi-Fi router that will serve
not just as a home router, but as a smart home hub. In addition to
Wi-Fi, the OnHub also includes Bluetooth 4.0 (supporting BLE)
and ZigBee support. OnHub will function off a low-power Android “derived” operating system dubbed Project Brillo by Google.
Project Brillo, announced in May, uses a protocol known as Weave
to enable communication – both locally and through the cloud –
between devices on different transports.
Through cooperation, working groups and standards-setting,
companies are working to make the smart home easier to digest.
This area will be interesting to watch going forward to see if the
differing smart home technologies can play nice, and if not, who
will come out on top. One thing is evident: the smart home is here
and as consumers become aware of these devices, the devices will
return the favor. n

The Smart Home at CES 2016
• he Smart Home Marketplace, presented by Bosch and
T
Coldwell Banker showcases technologies from basic security
monitoring to more customized access to appliances, lighting, window coverings, irrigation and entertainment systems.
• he CONNECTIONS™ Summit conference track, sponsored
T
by Park Associates, is a research and industry event focused
on the smart home, Internet of Things (IoT), and connected
entertainment. It also looks at trends and implications for
connected consumers as well as opportunities for companies
to build new revenue models.

Find out more at CESweb.org

18

Consumer Technology Association (CTA)™

Mark of Excellence
CTA’s Mark of Excellence awards recognize the best in custom
integration and installed technology. Each year, manufacturers,
distributors and systems integrators enter to compete in more
than 30 award categories for this honor. The award categories
range from security, energy management, health and wellness
and home theater.
Manufacturers can enter award categories that recognize new
products and technologies for the custom installation channel. Mark of Excellence recognizes Integrators with the Project
Awards covering 14 distinct project categories as well as the
TechHome Integrator of the Year Award celebrating a professional who exhibits outstanding business success, resource utilization, comprehensive technical skills, and shows exceptional
quality in their professional installations.
The Mark of Excellence Awards program culminates with the
announcement of the winners at the Mark of Excellence Awards
reception held during CES 2016. Winners are judged by independent experts within the industry.

CTA Adds New Smart Home Members
• oldwell Banker Real Estate: The oldest and most estabC
lished residential real estate franchise system in North
America – has joined CTA as a new member, establishing
itself as a leader in home technology.
• ibaro: Allows users to monitor, manage and automate a
F
home or work environment through Z-Wave wireless mesh
technology. Fibaro wirelessly controls your existing devices
to improve daily comfort and safety.
• EEO: Makes a smart system that communicates and conN
trols the devices in your home.
• niKey: Creates smart locks and smart access control.
U
Unlock the Kevo lock with your smartphone. Simply touch
your lock and walk in.
• endo: Focuses on creating smart home products and apps
Z
on Apple’s HomeKit technology. The Zendo Home app provides one-touch control over all HomeKit certified devices
from any manufacturer.
“CTA’s TechHome division is looking forward to working with
all our new home technology members to develop valuable
resources for CTA members and further educate consumers about the amazing things smart home technology can do
for them as they select systems for today’s digital homes,”
said Dan Fulmer, chairman of CTA’s TechHome division, and
founder and president of FulTech Solutions Inc.

CE.org/i3

TECH IS TRANSFORMING HOLLYWOOD
By Brian Markwalter

The 2002 futuristic thriller Minority Report gave us one vision
of the way in which we might interact with and use technology.
The movie’s gesture-based input with large, transparent screens
and layers of information are within our grasp today. Hollywood,
almost since its inception, has shown us future worlds shaped by
advances in technology.
Less obvious is the manner in which the technology we use as
consumers is transforming Hollywood. We can now watch anything from a six-second Vine video, probably on a smartphone,
to a weekend-busting full season binge of our favorite TV show
on the latest 4K Ultra HDTV (UHD). The business of Hollywood
is adapting to meet these demands. The immutable laws–that
content comes from Hollywood, that TV shows are viewed on TV
at an appointed hour, and that there are 500 channels but nothing
to watch–have been upended.

Contents May Have Settled
Like other parts of our lives, content creation has been “democratized” by technology. In a recent CTA national survey, 42 percent
of consumers said they have uploaded video content for public
viewing. Chances are none of the more than 1000 respondents
are attempting to make a living as content creators, but the stats
underscore the ease with which we can capture and share video.
YouTube is the runaway winner as the place where these videos
find their home, with 92 percent of uploaders indicating they had
placed videos on YouTube.

Apparently we like to eat, even more than we like to be stylish.
Yuya’s number one position among style channels lands her at
number seven among top food and cooking channels on YouTube
in terms of estimated earnings. Number one among food channels is “charliscraftykitchen,” which brings in almost $128,000
per month on 29 million views. It’s so easy a kid could do it – as
proven by Charli – who is eight years old.
But don’t quit your day job to start your career as a YouTube
star just yet. There are now 300,000 ad-supported channels on
YouTube. Major brands have created their own YouTube channels.
Professional production and marketing is part of the equation.
Yes, there is money to be made but the competition is high. Take
Smosh for example. Smosh was Ian Hecox and Anthony Padilla,
two teenagers lip-syncing to the Pokemon theme song until former Disney executive Barry Blumberg of Defy Media came along.
Through the collaboration with Defy Media, Smosh became an
established brand supported by a team of 50 writers, producers
and editors creating content for more than 35 million subscribers.
Despite the rise of consumer-generated content, the majority of
viewing, and therefore money, still goes toward professionally produced entertainment. Long form content, for both television and
movie distribution, requires investment that is beyond the reach
of the average person. Television programming costs roughly $2
million per episode by some estimates. Most movies cost between
$40 and $100 million to produce, and that is before marketing
and promotion costs. Even though most movies and TV shows are
being produced by familiar names, the buyers and distributors are
changing.

Sites like YouTube and Vimeo make it as easy to watch as it is to
upload video. The effortless nature of these sites means that a
lucky few can convert their creativity into millions of viewers and
eventually a way of life. PewDiePie is the current king of YouTube
with 38 million subscribers and nine billion views. He earns an
estimated $4.7 million per year from YouTube advertising alone.
Not bad for a Swedish video gamer with a pet pug.

The movie Veronica Mars is a great example of the changing
dynamics and is unique for two reasons. Rob Thomas produced
and directed the Veronica Mars television series on UPN/CW. After
the show was canceled, Thomas and Kristen Bell, the show’s star,
launched a Kickstarter campaign to fund the movie. They knew
their audience well.

For a more realistic measure of money making on YouTube, take
a look at the top channels among the popular cooking or beauty
and style genres. Yuya (lady16makeup), number one among
beauty and style channels, earns more than $41,000 per month on
35 million views. Michelle Phan, number eight on the list, earns
$15,000 per month, but more importantly, has already parlayed
her Internet fame into a brand of its own, including her Ipsy mail
order business that she says generates $100 million per year.

The Kickstarter campaign set the record for fastest project to reach
$1 million, the fastest to reach $2 million and the largest successful film project to date on Kickstarter. The campaign closed with
$5.7 million in pledges. With the strength of that backing, Warner
Brothers Digital Distribution agreed to support the film’s production. Warner Brothers Pictures agreed to widespread national release of the movie, and, in the other first for Veronica Mars, agreed
to simultaneous release for home rental or purchase through video
on demand and online platforms.

19

Crowdfunding is one way people can vote with their wallets, but
crowdfunding will not cause a big shift in the way media projects
are greenlighted. CTA’s consumer research shows that only five
percent of survey respondents have contributed to a crowdfunding platform, such as Kickstarter or Indigogo, to help fund a
movie or album. There is an indirect way that people are spending
their money that is having a big impact on television production.
Consumers have embraced subscription streaming video services
wholeheartedly and in doing so shifted the balance of power in
Hollywood. Netflix and Amazon are converting consumer spending on subscription video to purchases of original TV series.
Netflix’s story is well known, but it is still worth looking at
how the company changed its business model to coincide with
consumer preferences and technological capabilities. Netflix was
founded in 1997 in the heyday of video rental stores. Reed Hastings was slapped with a $40 late fee after renting Apollo 13 and
decided there had to be a better offering. Netflix’s first approach
was simply rental by mail, replacing the trip to the video store with
home delivery. On September 23, 1999 Netflix began its subscription rental service. Consumers loved it, propelling Netflix to one
million subscribers by February 2003.
Streaming was still four years away. An engineering professor once
said “Never underestimate the bandwidth of a station wagon full
of magnetic tapes going down the highway.” Or, in Netflix’s case,
never underestimate the bandwidth of a postal delivery truck carrying DVDs in red mailing envelopes. In 2003 available technology
precluded a viable Internet movie streaming service due primarily
to slow access speeds. At that time Internet access in the U.S. just
exceeded 50 percent of homes. It was not until the end of that year
that broadband subscribers finally outnumbered dial-up homes.
Only 25 percent of homes had an “always on” connection.
But Americans were falling in love with broadband. By 2007,
among those with Internet access, 70 percent had a broadband
connection, and only 23 percent still used dial-up. Overall, nearly
50 percent of adults had a broadband connection. It was in this
environment that Netflix launched its streaming service in 2007.
Despite the botched attempt to split the DVD business into a
separate company called Qwikster in 2011, the streaming business
grew steadily. Qwikster never saw the light of day.

Netflix is a big buyer. Netflix either
has released or has plans to release
48 originals in 2015, including the
third season of Orange is the New
Black and the sequel to Crouching
Tiger, Hidden Dragon.
The last big, disruptive step taken by Netflix was to create its own
scripted original series, releasing Lilyhammer in 2012. The following year Netflix resurrected Arrested Development, a Fox series that
aired for three seasons from 2003 through 2006. In true Netflix
fashion, all 15 episodes of season four were released at one time.
Netflix proved that Veronica Mars need not be the only deathdefying TV series in this age of change.

20

Consumer Technology Association (CTA)™

“The goal is to become HBO faster than HBO can become us,”
Ted Sarandos, Netflix chief content officer, told GQ in a 2013
interview. That quote was prescient and framed up the battle
taking place among media companies. This year HBO launched
HBO Now, its standalone streaming service. All the content of the
original, premiere cable channel is now available, without a cable
subscription.
It is not entirely true (or maybe remotely true) to say that content
no longer comes from Hollywood. Hollywood is the place that
has the infrastructure to produce movies and TV shows. But the
buyers are changing, and Netflix is a big buyer. Netflix either has
released or has plans to release 48 originals in 2015, including the
third season of Orange is the New Black and the sequel to Crouching Tiger, Hidden Dragon.

The Appointed Hour
Appointment television is all but gone. Some would argue sports
are the last domain of watching “live” TV. We can thank TiVo for
giving us the “peanut” remote control and making time-shifting
incredibly easy. TiVo’s innovation was recording to a hard disk
and making an excellent user interface. Content still got to “God’s
machine,” as then FCC Chairman Michael Powell called it during
a 2003 CES interview, through cable, satellite or an antenna. TiVo
“de-linearized” linear TV. We could now break our appointments
with prime time television.
Where TiVo brought us time-shifting, Sling brought us placeshifting; answering the question: “Why can’t I watch what I have
paid for when I am out of the house?” Where TiVo did not require
an Internet connection for content, Sling did require one for moving the content from your home to where you wanted to watch.
Admittedly, an Internet connection was useful for TiVo updates
and subscription management.
Sling has come full circle to answer the question: “Why is it so
hard to watch a few channels I want, on the device I want?” DISH
Network, the satellite TV service provider, announced Sling TV at
the 2015 CES. Was another Internet streaming video service really
newsworthy? Well yes, and the numbers are starting to prove it.
First, Sling TV is positioned as “Live TV without the cable company” and is priced at $20/month for the Best of Live TV package.
Without saying so, Sling TV is clearly aimed at cord cutters and
cord nevers. The pitch is about simplicity. Sign up online, download the app, sign in and start watching. No credit checks and
cancellation can be done online.
Roger Lynch, Sling TV CEO, in a recent speech discussed some
of what they have learned in their first months of operation. The
pitch to millennials and cord cutters appears to be working. More
than 90 percent of Sling TV customers are also Netflix customers. “We way overindex with Netflix,” according to Lynch. And for
those fearful that digital natives would never pay for entertainment, Lynch also indicated that young adults, ages 22 to 33, are
willing to pay for the right kind of service. By creating an “app
like” service and keeping it tailored, Sling TV has attracted its
intended subscriber base with a very low acquisition cost.
In addition to the $20 Best of Live TV base package, Sling TV
offers add on “Extras” for $5-$7 per month, including Sports,
Deportes, Kids, Hollywood, Peliculas and Novelas, World News,
Lifestyle, Espana and Columbia. HBO can be added to Sling TV
CE.org/i3

for $15 per month. Is HBO on Sling TV the same as HBO Now,
HBO’s Internet-only subscription service that costs $14.99 per
month? Almost. In keeping with its “live TV” approach, HBO on
Sling TV has a linear feed and on-demand, while HBO Now is
only on-demand. It’s a little ironic that the latest Internet OTT
service is marketed as live TV. More power to them.

57 Channels (And Nothin’ On)
In 1992 Bruce Springsteen released the album Human Touch,
including the single “57 Channels (And Nothin’ On).” The Boss
may have been wrong on the number of channels by an order of
magnitude, but the sentiment of wading through a bunch of extra
undesired channels was spot on. That same year Time magazine
ran an article titled “500 Channels and Nothing to Watch,” in covering the Tele-Communications Inc. announcement that the cable
operator would roll out compressed digital TV. John Malone’s TCI
was at one time the largest cable operator in the U.S. before TCI
was bought by AT&T. The nation was beginning its transition to
digital and with it a huge variety of channels through pay TV.

Top 20 Channels People would Select a La Carte
1

ABC

11

AMC

2

Disney Channel

12

Food Network

3

CBS

13

Animal Planet

4

NBC

14

The Weather Channel

5

History Channel

15

TBS

6

National Geographic
Channel

16

HGTV

7

Fox

17

TNT

8

PBS

18

TLC

9

HBO

19

FX

10

Comedy Central

20

ESPN

Source: Digitalsmiths, 2015

More than a decade later, we have settled into triple digit channel listings. Nielsen’s Advertising & Audiences Report from 2014
quantified the situation, noting that the average U.S. pay TV home
receives 189 channels, up from 129 channels in 2008. Over that
same period, the average number of channels people watch has
not budged from 17 channels. We watched on average 17 channels in 2008 and 17 channels in 2014, despite the addition of 60
channels.
Digitalsmiths, a TiVo subsidiary, recently dug into which channels people would include in a TV package if they were offered a
la carte. The results might surprise you, particularly since the pay
channel king, ESPN, is not in the top 10. In fact, it would land at
number 20, behind FX and TLC. Don’t confuse a popularity poll
with passion. ESPN has a strong and dedicated subscriber base.
Service providers have reacted to the spiraling cost and push
back from consumers, not to mention the reluctance of younger
customers to jump on the 500 channel bandwagon. Earlier this
year Verizon began offering a “skinny bundle” it calls Custom TV.

For $55 per month, subscribers get a base package of about 45
channels plus two channel packs, such as Sports and Kids packs.
More channel packs can be added for $10 per month each, similar
to Sling TV. More than one third of Verizon’s 26,000 new customers in Q2 selected the Custom TV bundle. Verizon added fewer
customers than analysts expected and more took the Custom TV
option, which puts negative pressure on growth. To be clear, Verizon’s launch of Custom TV is not based on a technology change. It
is a business response to shifting competition.
At least one content provider did not like Verizon’s approach.
ESPN has sued Verizon claiming that its contract precludes
distributors from placing ESPN and ESPN2 into a separate sports
bundle. Unlike Sling TV, Custom TV does not include ESPN and
ESPN2 in the base package. NBCUniversal and 21st Century Fox
have suggested that the Custom TV plan violates distribution
agreements but have not sued. Content rights are every bit as complicated as the changing technology landscape.

Two Rights Make it Wrong
Hulu offers a Limited Commercials plan for $7.99 per month and
a No Commercials plan for $11.99 per month. The disclaimer
on Hulu’s No Commercials option states: “Due to streaming
rights, the shows below are not included in our No Commercials
plan. You can still watch these shows interruption-free. They will
play with a short commercial before and after each episode. The
shows are: Grey’s Anatomy, Once Upon A Time, Marvel’s Agents of
S.H.I.E.L.D., Scandal, New Girl, Grimm and How To Get Away With
Murder.”
Kudos to Hulu for placing the disclaimer right up front. But, it
does underscore the individualized nature of distribution rights
negotiations. Broadcast rights and streaming rights are separate,
and the industry is still figuring out how to maximize revenue
while meeting consumers’ demands to watch anywhere anytime.
This small disclaimer is completely rational compared to the early
days of Hulu, when Hulu Plus was blocked from Google TV. It was
an early attempt to enforce the artificial idea that streaming is for
PCs and broadcast is for TVs, and never the twain shall meet. That
immutable law is gone too. Hulu’s device support page now has a
long list of media players, mobile devices, game consoles, smart
TVs, Blu-ray players and, at the end of the page, PCs.

The Revolution will be Televised on the
Internet
The Advanced Television Systems Committee (ATSC), the standards group that developed the U.S. digital TV system, is working
on the next generation replacement system. Historically, broadcast
DTV systems used MPEG standards for compression and to define
how to wrap the video, audio and auxiliary data into a “transport
stream.” Internet video streaming used, naturally, Internet Protocol. In a nod to the importance of IP, ATSC has chosen IP as the
basic transport structure for the next generation standard called
ATSC 3.0. Further, ATSC 3.0 will address both broadcast and Internet connections, allowing receivers to deliver new services that
combine content over-the-air with Internet delivered content.

21

The work on ATSC 3.0 underscores the inexorable march to IPdelivered video. As amazing as the growth of streaming services
like Netflix has been, it is still true that no streaming service today
can meet the simultaneous viewing demand of our largest events,
like the Super Bowl. Sling TV experienced a well-publicized outage
for some customers during the NCAA Final Four tournament.
The infrastructure for Internet video delivery is racing to beat the
increase in Internet video. In its Visual Networking Index forecast
from May 2015, Cisco predicts that 80 percent of global IP traffic
will be video by 2019, up from 67 percent in 2014. Matching that
trend, almost two-thirds of Internet traffic will be carried by Content Delivery Networks or CDNs by 2019, a dramatic rise from 39
percent in 2014.
CDN providers like Akamai, Amazon, Limelight, Level 3 and Microsoft run distributed networks of proxy servers and data centers
that push video content closer to consumers, which in turn makes
streaming faster and more reliable. The capacity to deliver video to
millions of viewers is growing at such a rate that we should be able
to stream the largest events in just a few years.

Content at CES 2016
• Space, from its headquarters at ARIA, is the CES experiC
ence for creative communicators, brand marketers, advertising agencies, digital publishers and social networks. It tells
the story of how content, creativity, technology and influencers come together to discover new ways to elevate their
industry, business and brand.
• he Content and Monetization and Content and Technology
T
conference tracks include sessions focusing on topics such
as how cord cutting is transforming the television industry,
adoption trends for 4K Ultra HD television, Internet and
streaming TV, and monetizing mobile content.
• he Digital Hollywood conference track focuses on major
T
topics related to content and the transformation of Hollywood: hybrid TV, over-the-top content, content anytime and
anywhere, digital advertising and Internet TV distribution.

Find out more at CESweb.org

Roy Amara is credited with stating what we now call Amara’s Law
that states, “We tend to overestimate the effect of a technology in
the short run and underestimate the effect in the long run.” We are
watching Amara’s law play out in the field of entertainment and
technology.
Like so many other fundamental shifts in the way consumers use
technology, the current transformation of content creation and
delivery is built on a foundation of other changes, including cable
and telecom deployment of ever faster broadband to homes, companies like TiVo, Netflix and Sling rethinking our relationship with
TV and movies, and Apple, Samsung, Google and others bringing
us a world of rich mobility. We are in the second half of the “long
run.” Prepare to be amazed at the entertainment options that will
be delivered to your nearest screen in the next few years. n

22

Consumer Technology Association (CTA)™

CE.org/i3

THE RISE OF SMART CITIES
By Shawn G. DuBravac, PhD.

Why Making Cities “Smart” Matters

C

ities have an extensive and intricate history. Early humans
were, of course, nomadic, gathering and hunting food and
following the seasonal migration patterns of these food
sources. Sedentarization began around 12,000 BCE as our ancestors cultivated and domesticated plants and animals through early
agricultural techniques and selective breeding. As these practices
were refined, semi-permanent villages formed and the earliest
civilizations took root between 8,000 and 5,000 BCE during the
Neolithic period.
This period is referred to as the Agricultural Revolution. While
early cultivation was marked by subsistence farming, that would
eventually deplete soil fertility and result in most settlements moving to more productive land, settlements built around semi-arid
river valleys were more permanent and able to support higher
population densities, as annual flooding renewed soil richness and
productivity. Some of the earliest identity markers of the first cities
were formed at the city’s origin – as elements in nature fostered
their creation and sustainability.
In due course, improving cultivation practices led to food surpluses, meaning it was no longer necessary for every member of the
community to farm. Specializations began to form around other
skills and trades. This accelerated commerce, which drove demand
for much of what still defines cities today: buildings, infrastructure
resources like ports, roads and bridges, tools, clothing, consumer
goods, and public services to deliver and address water and waste
to provide safety and stable governance.
And yet, with all of this, and despite the growth of cities over thousands of years, by 1950 some 70 percent of the world’s population
still lived in rural areas. However, things began to change rapidly
during the post-war period. Over the last six decades, urban population growth far exceeded rural population growth and by 2007,
over half of all individuals lived in urban areas. Current projections from the UN suggest this trend will continue over the coming
40 years. The UN projections suggest the world’s rural population
will decline between now and 2050 by some 200 million while
urban population growth, which will exceed 2.5 billion over the
same horizon, will account for all of the world’s overall population
growth (see United Nations, 2015). By 2050, some 66 percent of us
will live in cities.
Cities matter to more of us than ever before. How life unfolds
within these ever-changing urban environments is of importance

to an increasing share of the world’s population. Cities are evolving
at the very time technologies are “exerting a growing and pervasive influence on the nature, structure, and enactment of urban
infrastructure, management, economic activity and everyday life.”
This, in a nut shell, is what lies behind smart cities: an acceleration of urbanization at a time when technology is becoming more
ubiquitous.
The sophistication of urban centers was once defined by the height
of its buildings or the expanse of its subway system, but today the
sophistication of cities is being defined by the data traversing the
networks enveloping the city and how this data is being used. As
cities expand and become more pervasive – and as their opportunities and challenges become more pronounced – cities will turn
to technological approaches to leverage growth prospects and
overcome hurdles.

What Defines a City?
To truly understand smart cities, one must understand what makes
a city. Cities are complex systems that are perhaps more accurately
thought of as living organisms—ebbing and flowing as a diverse
array of forces are exerted upon them. Because of these unique and
strenuous forces, every city is different. The unique geographical
attributes that once helped define the earliest elements of a city’s
identity are only intensified as unique forces leave their influence.
The uniqueness of cities is important because the corollary suggests that every city will have unique needs and consequently have
unique solutions. Cities have both physical and virtual boundaries
and identities. As cities become “smarter,” their virtual identities and qualities will become decidedly more important. Here
are some of the key characteristics and attributes that define the
modern city.
People: Cities are defined by the people who populate them. This
includes the inhabitants of the city, workers who enter the city each
day but live elsewhere, students who live inside the city as well as
those who commute in, and tourists who visit the city during the
year. Collectively, these are a city’s stakeholders.
• nhabitants of a city form its core. They are the individuals
I
who work and live within the city. But inhabitants make up a
relatively small share of the totality of people who define
a city.
• ities are also defined by the workers who enter the city every
C
day. Manhattan for example, sees its daytime population

23

nearly double purely from the influx of workers who commute in each workday. These workers provide important contributions to the value of the city, but also exert costs on the
city by using scarce city resources and taxing other elements
of the city like transportation, energy, and communication
networks.
• ities are also made up of students who temporarily live
C
within the geographic confines of the city or commute in
each day. Some 70,000 students commute into Manhattan
on average each day for example—nearly five percent of
the number of the local inhabitants who live in Manhattan.
Students contribute to the value of the city in many ways, but
also exert costs on the city.
• inally, cities are defined by the tourists and other visitors
F
who journey to the city throughout the year. Like workers
and students, these individuals provide tremendous value to
the city but also exert significant costs on the city. It isn’t uncommon for the number of tourists to far exceed the number
of inhabitants by multiple factors. To put these dynamics into
perspective, consider that New York City has roughly 8.5 million residents, but receives more than 56 million tourists each
year, the bulk of which are likely visiting Manhattan where
roughly only 1.5 million people reside. In other words, the
number of tourists visiting Manhattan throughout a given
year could be 37 times the number of full-time inhabitants.
Land: Cities are defined by the physical land they occupy with
unique histories and parameters. Cities may occupy land that is flat
and expansive or they may be defined by natural terrain features
like mountains, valleys, rivers or coastlines. These characteristics
help define not only the current city, but also its future because
they determine how the city can expand geographically—both the
opportunities and the restrictions. These characteristics also speak
to why the city exists where it does in the first place and the origins
of a city speak to its future. Land, and its defining characteristics,
helps influence the culture and identity of the city.
Infrastructure: A city is defined by its infrastructure, which is
both physical and virtual. Infrastructure includes the transportation networks of the city: the bridges, tunnels, roads and ports. It
includes the public transportation networks that include buses,
trams, trolleys, subways and metros. The infrastructure of a city
includes the energy and utility networks like water, gas and electricity and includes facilities like power plants and water treatment
facilities. A city also is made up of broadband and communication
networks that have both physical and virtual components. Increasingly, a city’s infrastructure is defined by its virtual elements. The
deployment of the Internet of Things (IoT) technology solutions
have both physical and virtual aspects which are equally important
to their successful implementation.
Government: A city is defined by its government, which contains
many facets. It works to increase the sustainability of the city
through more efficient use of scarce resources and greater access
to jobs to help to promote sustainable growth. The government
works to improve relationships among its citizens and between

24

Consumer Technology Association (CTA)™

citizens and government. A city’s government plays an important
role in the implementation of city-wide initiatives and will play a
critical part in the deployment of smart city initiatives.
Culture: Cities are self-organizing entities, prone to certain behaviors and adaptations. A city’s culture influences and defines what
is important to its inhabitants and other relevant stakeholders.
Culture has a pronounced impact on the type of smart solutions
that are deployed within a city.

What Defines a Smart City?
The term ‘smartphone’ was first coined in 1995 and its definition
has changed continuously since then. Likewise, the definition of
what constitutes a smart city keeps shifting. There is no universal definition of what typifies a smart city because every city has
unique needs and will therefore implement distinctive solutions.
Just as no two cities are alike, no two “smart” cities will be alike.
But smart cities will share many common characteristics and goals.
Here are some common attributes as well as some of the shared
objectives of smart cities.
The Use of Technology: The use of technology is at the core of
every smart city. Cities are confronted with a diverse array of challenges and opportunities that require innovative approaches. Cities
taking advantage of advanced information and communication
technologies (ICT) to provide services and solutions are then able
to move down the continuum towards smart cities.
Smart cities are urban environments where digital, connected,
‘sensor’ized devices and objects are intentionally (purposely and
with design) embedded into the fabric of the urban environment.
As the building array of smart city solutions illustrates, these digitized, connected, and ‘sensor’ized objects encompass a wide scope
of technologies. A smart city is simply a city that uses digitized,
connected, ‘sensor’ized technological solutions to meet its growing
needs and opportunities.

A smart city is simply a city that uses
digitized, connected, ‘sensor’ized
technological solutions to meet its
growing needs and opportunities.
There are two primary reasons for deploying smart cities technologies: to monitor and to manage. Cities are living organisms
and keeping track of their pulse will help ensure they thrive. To
fully understand the characteristics of a city, it is vital to analyze
data about diverse elements relevant to the health of the city. In
many cases, this data already exists, but wasn’t being captured in a
systematic way. If a city wanted to monitor or measure something
historically, it had to do so in a cumbersome, analog fashion.
By collecting data digitally, several things happen. First, cities can
monitor more. In other words, smart city technologies enhance
scaling. When my father was a teenager, he was paid to sit on
the side of a highway outside of Las Vegas, Nevada counting the
number of cars that drove by. This was a decidedly analog way
of capturing data and it meant that because he was counting the
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vehicles that drove by on one stretch of desert highway, he couldn’t
count the vehicles that might be passing a different stretch of
highway. This constraint of the analog world is overcome when we
digitize, through the deployment of sensors and wide swaths of
data. Through the deployment of digitized and ‘sensor’ized objects,
cities can make a significant trove of data available.
Digitization of data empowers real-time information processing.
What this means is real-time data interpretation and application
enables new observations and insights about the city. By adding
connectivity to digitized and ‘sensor’ized objects, cities can share
this digital data widely to both relevant stakeholders and to other
digital devices.
Ultimately, this leads to data-augmented decision making, based
on new insights gleaned from previously difficult to ascertain
information. Data might be used to inform citizens toward some
collective action (like conserving water) or data might be used to
inform other digitally connected objects, which then make decisions autonomously.
The use of technologically-infused solutions is what most consider
makes a city smart. But more specifically, a city’s operations and
decisions become “smarter” because the city increases the breadth
and depth of monitoring and measuring. The digital attributes of
this leads to real-time information processing, which in the end
leads to data-augmented decision making.
Right now, most smart city applications focus on the early stages of
monitoring and measuring. A smart city is an urban environment
that monitors conditions of its critical infrastructures including all
of its transportation assets (bridges, roads, tunnels, airports, seaports, trams, subways, buses), communication assets (telephone,
Internet), natural resource assets (water, electricity, gas), major
buildings, and other relevant features to include people, land and
even other aspects that help define the culture of the city.
Increased Dissemination of Information: A key attribute of
smart cities is heightened communication of information that is
conveyed to relevant stakeholders like residents, but also conveys
information between machines to optimize elements of the urban
environment through autonomous data analysis and decisionmaking. A truly smart city will take monitoring data and make it
available in useful ways to improve the quality of life of its citizens
and the assets and resources of the city.
Modeling Future States of the City: A key element of smart cities
will be modeling future states of urban environments to optimize
value creation. This might include modeling different options for
land development for example, as cities try to determine development strategies that optimize the welfare of diverse stakeholders.
Modeling within a smart city takes on a very different tack than
historical city planning because of the digitized data collected
through sensors. This allows for the analysis of and projection
from real data. Relevant stakeholders might have access to data as
diverse as pollution levels, sounds decibels, vehicle traffic and foot
traffic.

Goals and Objectives of Smart Cities
Smart cities share many of the same goals and objects that all
cities have, namely:
1. Improve the operations of the city’s functions
2. mprove efficiency (and reduce inefficiencies) of the city’s
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resources
3. Improve the city design as it expands and grows
4. Improve citizen engagement
5. mprove citizen awareness and knowledge (communication and
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connection between citizens and public administration)
6. mprove the quality of life of its citizens and better meet the
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needs of both its current citizens as well as its future citizens
through improvements in public and private services (like
transportation and health services), providing and maximizing green space, improve social inclusion (especially as the
population ages)
7. mprove sustainability through urban gardening
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8. ull together multiple, diverse stakeholders
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9. o successfully use public and private initiatives
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10. o address growing problems of urbanization which include
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traffic, pollution (reducing CO2 emissions), and waste treatment (the reduction of waste)
11. o conserve resources and improve energy and water conT
sumption by improving building efficiencies, utility networks,
and increasing renewable energy productions
12. fficient deployment of scarce resources, including the most
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valuable utilization of limited real estate
13. inimize the digital divide that exists between urban individuals.
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Examples and Implications of Smart City
Technologies
City planning today is based on centuries-old approaches that
centralize the delivery of drinking water, food, energy, transportation and the removal of waste. But these approaches are outdated
for the complex urban environments we now occupy. Tomorrow’s
urban designers must focus on the needs of cities and their diverse
array of stakeholders in a more holistic sense. We are living in
dynamic, networked environments that are changing the patterns
we have exhibited for centuries. Tomorrow’s urban solutions must
be adaptive, dynamic and robust.
In order to thrive, cities must directly address the realities of the
changing complexity of urbanicity. For example, consider that the
average car is parked roughly 90 percent of the time. City planners of the past might approach this circumstance by increasing
the availability of traditional parking spaces. City planners of the
future are taking a very different tack. Today, city planners are
using nontraditional approaches to address the needs of urban
stakeholders and progressively implement systems to alter behavior
and increase efficiency and livability.

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The City Science Initiative at the MIT
Media Lab
The City Science Initiative at the MIT Media Lab highlights how
academia is trying to provide an interdisciplinary approach to improve the understanding, design and livability of future cities. The
City Science Initiative combines the following research approaches:
1. Urban Analysis and Modeling: Aim at informing city design

through data-driven analysis of the diverse activities within an
urban environment including economic activity, resource consumption, mobility patterns and other human behaviors.
2. Incentives and Governance: Focus on the creation of new mod
els and incentive mechanisms to improve the efficient and equal
distribution of urban services, reshape consumption patterns
and remodel shared-used systems.
3. Mobility Networks: Rethink urban transit through the design of

new vehicles systems and multi-modal mobility recommendation engines.
4. Places of Living and Work: Adapt to the changing nature of

work brought about by ubiquitous Internet access and mobile
devices by designing transformable urban housing and workplaces as well as advancing hydroponic and aeroponic urban
farming techniques so urban residents can grow their own food.
5. Electronic and Social Networks: Create trust networks that

provide security and privacy of personalized data while at the
same time fostering new patterns of learning, communication,
recreation, production, and health.
6. Energy Networks: Develop new technologies that can dy
namically respond to changing human mobility and behavior
patterns. These new technologies include the integration of
renewable energy sources and energy storage.
The City Science Initiative seeks to develop urban strategies that
can result in 100x reduction in CO2 emissions, 10x reduction in
traffic congestion, 5x improvement in livability, and 2x improvement in creativity.
Smart technologies are popping up across cities worldwide. In
India alone, the Narendra Modi government recently announced
98 cities – including 24 state capitals – that will have smart city
projects. Here are a few examples:
Amsterdam: Business districts redeveloped into mixed-use communities with residential and commercial infrastructure. Smart
parking for both cars and bicycles, home energy storage and a new
intelligent electricity network called the “Smart Grid,” which uses
additional computing power and sensor placement to cheaply
and continuously monitor the power grid’s voltage and currents,
predict outages and improve efficiency.
Barcelona: Irrigation systems for public gardens like those in the
city’s Parc del Centre del Poblenou have migrated to an Internetenabled system that remotely monitors and controls, but also
collects data that can inform the system. Sensors in the gardens
provide data on humidity, temperature, sunlight and wind speed
to ensure the precise amount of water is applied.

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Consumer Technology Association (CTA)™

Boston: More than 150 government transactions can be completed
entirely online. The city uses cameras and inductive loops to manage its notorious traffic and acoustic sensors to identify and locate
gun shots. Government-endorsed apps, like Street Bump and
Citizens Connect, allow the city to identify non-emergency service
requests like pothole repair and public property damage directly
from citizens.
Copenhagen: The city’s award-winning plan, “Copenhagen Connecting” seeks to collect and use data to make Copenhagen carbon
neutral by 2025 by improving energy efficiency, transportation, renewable projections and green building standards. Instead of huge
infrastructure construction projects, the city uses big data collected
from mobile phones and GPS data from public transport vehicles
along with sensor data in waste and sewage systems to intelligently
improve traffic, emissions levels and pollution.
London: London Datastore is a free and open data pool of more
than 500 data sets on all things related to the capital city. The
program seeks to solve some of London’s most pressing problems
related to air pollution, health, emissions reduction and urban
food availability by granting open access to its big data.
New York: New York City has plans to replace all 250,000 of its
street lights with LED lights by 2017. The Port of New York and
New Jersey has been working on a joint pilot project to turn a
number of those lights “smart” by adding sensors. Smart street
lights can adjust their own intensity for night, amount of traffic and weather. Manufacturers claim new smart street lights can
save 50-70 percent on electricity over standard bulbs, and pay for
themselves in roughly five years.
Seattle: Seattle’s Happiness Alliance embraces a vision of society
“based on the wellbeing of all beings and an economy guided
by happiness, sustainability and resilience rather than just gross
domestic product and economic growth” and values the role technology plays in improving happiness and sustainability. The city is
home to more than 1,000 open data sets for use by anyone looking
to solve mutual problems with commuting, energy use and crime.
Seoul: The city provides more 1,200 open data sets. Songdo, adjacent to the Seoul airport, is a purpose-built smart city designed as
an international business hub focused on sustainability and accessibility. It’s a composite of the best, most effective elements from
cities around the world.
Singapore: Singapore strives to be the world’s “smartest city” and
with sensorized intelligent traffic management, congestion pricing
for drivers, one of the most advanced water management systems
and 95 percent of its homes and business enjoying a new extra-fast
broadband Internet access, the goal is within reach.
Vienna: The city’s “Smart City Wien” plan aims to improve the infrastructure, energy use and mobility of Vienna through individual
projects like Aspern, Vienna’s Urban Lakeside urban development,
an open government data source and the Citizens’ Solar Power
Plants.
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The Power of the Individual in Fully
Realizing the Potential of Smart Cities
The deployment of smart city solutions is accelerating with consumer adoption of digitized, connected, ‘sensor’ized technologies.
In the past, adopting new city-wide initiatives and services would
require significant coordination and oversight. In many cases, cities
provided most of the required investment and all of the direction.
However, this is changing. Cities are no longer becoming smarter
exclusively through their own strategies and implementations.
Increasingly, private approaches are creating meaningful solutions
in urban areas. In addition to academic solutions, many urban areas are creating public-private partnerships to develop and deploy
smart city technologies. Amsterdam Smart City and TINA Vienna
are a few examples of these shared initiatives.
Further, many of the smart city solutions that are launching build
off of consumer technologies individuals have adopted. These
include first and foremost mobile phones, but encompass a much
larger array of technologies.
There are myriad examples of these solutions. Streep Bump, for example, is an app developed in partnership with the city of Boston
that uses the smartphone’s accelerometer and GPD to detect when
you’ve driven over a pothole and automatically report the location
to city services. Other solutions, like Citizen Connect, allow Boston
stakeholders to identify and report non-emergency service needs
through text, tweets or a dedicated app. Citizens can also see recent
reports via map as well as submitted images.
Drivers spend an average of 20 minutes a day searching for parking. Mobypark is a solution that offers drivers the ability to book
available parking spots in advance. These include traditional parking spots in public parking garages, but also include parking spots
in hotels, hospitals, and even private parking spots that are unoccupied and can be rented. Ultimately, the adoption of adaptive
technological solutions by residents and other relevant stakeholders will allow cities to truly become smart.

Sharing Economy
The sharing economy is an important building block toward truly
self-regulating, adaptive systems that will define the smart cities of
the future. Many are hybrid solutions that bridge between the cities
we have long occupied and the digitized, connected, ‘sensor’ized
cities that these cities will become. Just as the sharing economy
has ebbed and flowed as urban environments have collided with
new technologies, these services will continue to transform and
adapt to the ever-changing nature of cities. The drive toward smart
cities is a drive towards better utilization of resources and a push
towards sustainability. Ultimately, smart city solutions are about
deploying services to better meet the needs of its citizens.
The sharing economy improves the livability of a city by efficiently
using scarce resources as well as by providing services demanded
by a city’s diverse array of stakeholders. These services also provide
crucial flexibility in a city that is constantly on the move, expanding and contracting the services it needs.

Take, for instance, Uber, Airbnb or other similar services. They are
designed to adapt as the needs of the city change in near continuous time. The pricing mechanisms of Uber, for example, are
designed to self-regulate supply and demand. This is something
that most services don’t yet do, but will be commonplace within
the smart cities of tomorrow. Today, public transportation is often
overrun by large events. But digital, ‘sensor’ized, and connected
technologies could inform these services with information about
how many people are attending a sporting event or concert, alerting
these services as those individuals begin to head towards to the exit.
These services provide transparency, and therefore trust. It’s never
been safer to take a ride with a complete stranger in the middle
of the night or sleep on the couch of someone you’ve never met.
These services are preparing us for an environment where the digitization of information takes on a more pronounced role in our
daily lives and helps define the services with which we’ll engage.

Define the Type of Cities We Want
A city is smart if its investments in both human and fixed capital
impel sustainable economic growth while improving the welfare
of all stakeholders. This involves the strategic deployment and
implementation of sensors to help us learn and understand the
dynamic changing nature of our urban environment. The deployment of sensors is helping us learn what we don’t know, such as the
ebb and flow of a city’s citizens and other stakeholders. Sensors let
us capture the timing and type of services urban stakeholders are
using and at what rate they are using them. This is all information
that was observed, but not captured in a digital way, and subsequently unable to inform services and improve welfare.
Defining what a smart city is – or will be – is ultimately about
deciding what type of city we want to have. It’s important to recognize that smart cities fit within the larger context and framework
of the Internet of Things. By digitizing objects, embedding sensors
and connecting them, one is able to subsequently digitize the
physical space around these objects—and consequently around
ourselves. The most imperative step is making meaningful use of
this data, moving information from simply monitoring toward
actionable implementation. n

Smart Cities at CES 2016
• he Internet of MEMS and Sensors conference track, preT
sented by MEMS Industry Group, will feature sessions related
to the Internet of Things (IoT), examining the sensor-based
reality that will make the smart city possible.
• uch of the technology surrounding the smart city of the
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future will revolve around the automobile. The Automotive
Technology conference track will focus on topics such as
the future of self-driving cars, phone-car connectivity and
the accessibility of apps in the vehicle and consumer trust in
autonomous vehicles.
• he Exploring Tomorrow’s Automotive Mobility Ecosystem
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conference track, sponsored by Deloitte, explores the impact
of converging forces shaping the city of the future including
autonomous vehicles, the Internet of Things, and consumers’
shifting transportation preferences in the evolving personal
mobility ecosystem.